BPCL

In 1860-70s during vast industrial development, an important player in the South Asian market was the Burmah Oil Company Ltd, which had been formed in 1871 to refine crude oil produced from primitive hand dug wells in Upper Burma. In 1928, Asiatic Petroleum Company (India) started cooperation with Burmah Oil Company. This alliance led to the formation of BurmahShell Oil Storage and Distributing Company of India Limited. Burmah Shell began its operations with import and marketing of Kerosene. On 24 January 1976, the Burmah Shell was taken over by the Government of India to form Bharat Refineries Limited. On 1 August 1977, it was renamed Bharat Petroleum Corporation Limited. It was also the first refinery to process newly found indigenous crude Bombay High. Bharat Petroleum owns refineries at Mumbai and Kochi (Kochi Refineries) with a capacity of 12and 9.5 million metric tonnes per year respectively. Its subsidiary at Numaligarh has a capacity of 3 million metric tonnes per year. On 25 May 2011, the Bina Refinery in Madhya Pradesh with a capacity of 6 million metric tonnes per year was commissioned.

The Focus
Bharat Petroleum produces a diverse range of products, from petrochemicals and solvents to aircraft fuel and specialty lubricants and markets them through its wide network besides supplying fuel directly to hundreds of customers. The production-based success philosophy of marketers was replaced by a customer-oriented philosophy.

Control Systems

In practice, the Management Control Process is behavioral interactions among the managers and between managers and their sub-ordinates. In todays dynamic world, every individual/managers differ from each other in terms of the following attributes: Technical Ability Leadership Style Interpersonal Skills Experience Decision Making Approach Planning and communicating Skills.

These above mentioned differences are the different ways, the Control Process is used. Nevertheless, the Formal Management Control Process is the best set of practice that should be used throughout the organization.

Steps in Management Control Process

Strategic Planning: The first and foremost element in the Control Process is Strategic Planning. A formal statement of plan which deals about, the future direction of the organization is going to take, is called Strategic Plan. In other words, It is the process of deciding on the programs that the org will undertake and on the appropriate amount of resources that will be allocated to each program over the next several years. Budget Preparation: A budget is in sense one year slice of the strategic plan. It shows the details of revenues and expenses for the budgeted year for each responsibility center and for the organization as a whole. Measuring & Analyzing Financial Performance: In this stage, a formal report of financial performance is prepared for the review of the top level managers for their future course of action. This report consists of actual revenues and costs with budgeted amount. Managers measure the deviation of the actual and standards and taken necessary course of action.
2

Management Compensation: Lastly, this Control Process includes the Compensation system. Compensation is always a motivating factor which helps the employees to attain their goals. Managers put forth a great deal of effort on the activities that are rewarded.

Organizational Structure
The Old Structure The older structure was functionally organized. There were mainly four functions (refineries, marketing, finance and personnel) each headed by an executive director reporting to the (CMD). Other support departments like corporate affairs, legal, audit, vigilance, coordination and company secretary were directly under the CMD. The Director refinery was in charge of refinery, corporate planning, JV refineries and special projects. Other than corporate finance and marketing finance EDP was also under the Director finance. In marketing, there were different departments for retail, industry, LPG, lubricants and aviation segments. Corporate communication was also under Director marketing.

The whole of India was divided into four regions and further into 22 divisions. Each region was headed by a Regional Manager who was in charge of all activities within the region and reported to the Director marketing. Each region had a manager in charge of each of regional personnel, regional engineering, regional industrial customers, regional retail, and regional finance. Regional LPG was under regional industrial customers. The division was the responsibility of the Divisional Manager reporting to the Regional Manager. He had a manager each for sales, operations and engineering. Each of these was responsible for sales, depots and engineering respectively for all the customer segments.

Across the marketing function, except for the corporate departments (LPG, industrial customer, etc.) specifically looking after a customer segment, every individual and role is focused on multiple customer segments. For example any strategy addressing the industrial customers originates from the Corporate Department (Industrial Customer), goes via the Director Marketing, Regional Manager, Divisional Manager to the Sales Officer. All of them are responsible for multiple customer segments like retail, LPG, industrial, etc and deal with
3

different classes of customers. Hence there was very low customer awareness in terms of the unique needs of the different customer segments, with no single individual at the operational level having clarity on any single customer segment. Moreover, the marketing strategy was formulated by people who were far from the customer with very low understanding of the customer they were targeting. The implementers were responsible for diverse customers with a low understanding of the logic of these strategies meant for each customer segment. Thus the old structure had created a bottleneck between the strategy formulators and implementers in terms of the regional structure, and between the field staff and the corporate offices and refinery. Activities of a business process are spread out across different functions and levels of hierarchy, engaging many individuals. There was a long chain of non value adding linkages between any two activities targeting a business / customer. For example, when an industrial customer gives a special order of lubes to the sales officer, the corporate lubes purchases the base oil, plant blends it, S&D packs it and the sales officer sells it. The Sales Officer would communicate the order to the Divisional Manager, who passes it on to the Regional Manager. Then the order would be routed to the Corporate Lubes for processing. Everyone involved in the activities of this process belong to different functions and hierarchy levels. This long chain of communication had led to a lack of customer orientation, low awareness of customer needs and expectations and slow response.

 The New SBU Structure

The new structure was focused on the business processes and the customer. The new structure at the top management level is the same. Five SBUs Retail, Lubes, Industry/Commercial, LPG and Aviation are customer centered SBUs and come under the director (marketing). The sixth SBU, Refinery along with two new departments IT & Supply Chain and R&D are under the director (refineries). Each SBU would have its own HR, IS, finance, logistics, sales, engineering, etc. The number of layers in the organization was reduced to four from six or seven. The major change is the introduction of the territories covering a smaller geographical area and focusing on specific customer segments. In retail SBU the new structure had 66 territories reporting to the four regional offices, where as in the earlier structure there were only 22 divisions which catered to all segments. In other SBUs the regional office was removed and territories were designed to directly report to the SBU heads. Each territory team leader was responsible for sales in the territory only for a specific product. The territory structure was designed to enable the field staff to focus on specific customer segments. Authority was also delegated down the hierarchy and decision making pushed to the lowest possible levels. Decisions earlier taken at the regional level were taken now at the territory level. Further authority was delegated to the role and not the hierarchy level. Administrative offices have been moved to supply locations that consist of 125
5

terminals for main fuels and 35 LPG bottling ones. In LPG SBU head office there are only nine personnel and across the territories even managers at senior positions have been forced to get business.

The new design incorporated recalibration of roles and responsibilities and redeployment of more than two thousand people (around one fifth of total employee strength) across the organization. It created new roles at the front effectively using redundant manpower to increase customer interface and interaction. Since the corporate and support functions are now located within the SBUs the new design included lateral linkage mechanisms. Governance Councils, Process Councils, and Task forces (to address specific organizational issues) were the mechanisms for integrating the different parts of the organization.

Some Salient Features of New Structure were Highly empowered work force Decentralized decision making De-linking of authority from hierarchical levels Orientation towards internal and external customers Regular market research and customer surveys Conscious brand building efforts

 Culture
At BPCL, taking care of employees intellectual and growth needs and the promotion of a cohesive work culture is important. BPCL has always put People above Oil and attributes all its achievements to its people. It is in the organizations interests to look after their people, enable their growth and provide support in the best possible way. Their employee strength is around 14000 spread across the various dimensions of India.

In terms of professional development, well-established central and regional learning centers conduct programs for skill upgradation that are precise and linked to business priorities, enhancing employees ability to drive change. Attracting and retaining employees is a key challenge in this highly competitive environment. BPCL has geared up to this challenge and is striving to make our work environment more informal and approachable and has also started a mentoring process. A newly introduced initiative that has met with resounding success is the face-toface counseling for the employees and their families.

BPCL is also working towards promoting diversity in the workforce. They recognize that there is much to do in this area, but with the provision of facilities such as crches for mothers, set up of sexual harassment committees, etc. they are moving in a positive direction. They also encourage their people to pursue their passions. In a country in which sports are often neglected, BPCL has taken it upon itself to encourage promising sportspersons by providing them employment with the company. For Bharat Petroleum, commitment of its employees is a critical resource. Fully realizing that only a satisfied employee will put his best foot forward with the customers; Bharat Petroleum has taken many steps to make the organization a Great Place to Work.

Bharat Petroleum fosters effective value-based HR processes for development of people and their organizational capabilities with a view to provide them with a competitive edge and also to realize their personal vision in tandem with the corporate vision. The thrust areas include:

Performance Management which links business goals with individual performance goals. Recognizing competencies and capabilities of the staff through Competency Modeling to help identify and place the right person in the right job.

Identifying competency gaps and bridging such gaps through appropriate training and developmental program.

Multi-skilling to encourage employees to take up new initiatives in the areas of Enhanced Fuel Proposition, Add-on Stores, One Stop Truck Shops, Grocery and Fast Food Stores.

Recruitment at BPCL takes place at a junior level. Most recruitment at BPCL is at entry level. The company believes in building its human potential rather than buying it from the market. Until now it was seen as a lifetime job and people worked their way up through the management.

They believe in increasing sales force from the existing employee base by retraining and redeployment of management staff.

At BPCL, they try to keep the employees happy by helping them to maintain their work life balance.

The corporate vision, which includes ideals to Be an ethical company and Make people the source of our improvement are reflected in the policies relating to employees. Essentially, without fair practices, attaining the vision would be impossible. The notion of discrimination between employees on any basis, be it religion, sex, race, colour, age, political affiliation, is not tolerated. They are an equal opportunity employer and appoint staff solely on the basis of merit and abilities. Any case of discrimination can be raised to the appropriate personnel and the case is resolved through appropriate channels. As per government rules and regulations, they have special reservations and concessions for employing persons with disabilities and for people belonging to the Scheduled Caste (SC), Scheduled Tribe (ST) and Other Backward Categories (OBC) in the organization.

 Rewards & Remuneration

At BPCL, taking care of employees intellectual and growth needs and the promotion of a cohesive work culture is important. Regular performance appraisals reward strong performance, identify training needs and help people set objectives in terms of career progression and performance targets that are of mutual benefit to them and the company. With a view to differentiate performance and reward high performers, they introduced a Performance Related Incentive Scheme in 2003-04. Since then, quarterly career development reviews are conducted for all employees apart from the year end performance appraisal. Every employee has the freedom to complain regarding various issues like home, promotion policies, subordinates, boss etc to the higher authorities. BPCL follows a Total Rewards Approach which focuses on both monetary and non monetary Incentive. Along with providing a basic compensation to the employees, various kinds of benefits are also provided.

Appraisal system
Each employee is continuously evaluated on the basis of his/her performance. The basic evaluation is by the measurement of the outputs given by him. In case of a problem the manager along with his sub-ordinate can sit and track down the root cause of the problem in order to eliminate it. Appropriate solutions are developed and the result is seen in the next appraisal (after a period of 6 months) Feedback system is also used. Performance appraisal systems are in place in the company. 360 degree mechanism approach is adopted by the company. They have now started following a fast track promotion policy wherein the min. no of years of experience is brought down from 5 to 3 years. This has been done in mind specifically keeping the younger generation and their quick job changes. This is done with a view to retain the talent. The categories are from A- K (Lower most to Chairman).

 Performance Management System:

BPCL has a strong PMS system for rewarding employees which has evolved over the period of time. In 1999 the balanced scorecard concept was introduced In 2003 Performance related incentive scheme was introduced along with along with relative ranking introduction in order to link rewards and performance In 2009 they introduced SAP platform to leverage technology for PMS In 2009 launch of Strategic Performance Workshop to create alignment between business goals and Individual goals

10

 Employee Benefits
Some benefits provided by BPCL are Medical benefits, Leave Benefits & Promotion Policy. The health and well being of the workforce is of prime importance. They conduct complete health check-up for all employees once a year. They also carry out health check ups for employees working in hazardous areas of our refineries and lubes locations every six months. They are aware of the fact that todays life style is stressful and most of the locations have taken up health and well being initiatives in one or another form. They provide counseling for life-style

diseases-diabetes, hypertension, etc. for employees. Also conduct stress management sessions, yoga, meditation etc. at many locations.

They are aware that truck crew and lorry crew are in high risk category to HIV/AIDS infection. They were amongst the first companies in India to sign the ILO Charter on HIV/AIDS. They conduct AIDS awareness training and provide treatment expenses on a case by case basis and balancing related factors. They tied up with respected NGOs that help in awareness creation and provide quality counseling and treatment to HIV infected people.

Communication & Coordination

In working towards the goals of the organization, operating managers must know what these goals are and what actions they are supposed to take to achieve them. They receive this information through various channels, both formal (e.g. Budgets and other official documents) and informal (e.g. Discussions). Despite this range of channels it is not always clear what senior management wants done. An organization is a complicated entity and the actions that should be taken by any one part to further the common goals cannot be stated with absolute clarity even in the best of circumstances. Moreover the messages received from different sources may conflict with one another or be subject to differing interpretations. Coordination is required for managing the individual responsibility centers plan to be inline with the company goals. This is essential so that the individual goals do not hamper the long term goals of the company while benefitting just the short term achievements of the division or
11

the manager in charge. For example when the company budget is prepared the staff managers of each division prepares their budget. When these budget pieces are joined together for the budget planning of the company, there might be some inconsistencies which may crop up. These inconsistencies may arise due to over expectations of output which depends upon more than expected output from support divisions. Such kind of inconsistencies are then identified and resolved by coordinating between the individual budgets makers.

The Strategy Development effort at Bharat Petroleum achieves better focus in the new organizational structure, besides facilitating the SBUs in developing their respective strategies that lead to an integrated Corporate Strategy. A Business Planning process has been put in place that not only provides opportunities for the SBUs to pursue their visionary goals in consonance with the Corporate Vision, but also continuously monitors trends and identifies strategic opportunities for the Corporation. This importance of communication & coordination is further exemplified with the size of the organization, scope of its operations and its many subsidiaries as shown below

12

This requires the company to create a mechanism for the decision making and strong delineation of the roles & responsibilities. The following is created for communication and coordination control system Councils Governance Councils Process Councils Task Forces Owners Apex Council , Executive Council , Management Council Cross entity councils for managing core business processes Cross entity task forces for addressing inter-business issues

The role of Apex Council is defined as decision makers of corporate strategy, Portfolio of investments, Joint-ventures and alliances, Delineation of the boundaries and decision-rights of the organization entities and Performance targets for the organization entities reporting to the Apex Council. Selection, development and appraisal of executives who head the internal organization entities that report to the members of the Apex Council. Shaping and preserving corporate values and the corporate image. All fulltime/ functional Directors would be members of the Apex council.

The role of Executive Council is defined as decision makers of Integration of Corporate and SBU decisions, Maintaining the balance between the focus required by the SBUs on their respective businesses and the cohesion required between them, Consistency of policy and standards across the organization in matters in which such consistency is considered necessary, Taking specific policy decisions if a separate Process Council does not exist for that subject, Study the processes by which the organization learns from the successes and setbacks of its various parts and gains shared insights into the external environment.

The members of the Executive Council would include the members of the Apex Council, the leaders of the SBUs and the following entities - Strategy, Brand, HR, IT, Finance, E&P and the Leader of the CUSECS Team.

13

The role of Management Council is defined as decision makers of Ensuring consistent and adequate communication with the leaders of the organization, testing options for decisions and receiving suggestions and feedback. The Management Council shall comprise of General Managers and above by rank and entity heads.

Process councils provide a forum where issues which have organization wide ramifications are analyzed and a consensus developed. Typically there would be process council for brand, strategy, HR, IS, and finance. The role of Process Councils will be to be a sounding board for proposals put forth by the businesses, to encourage consistency across the businesses in issues that have organization-wide ramifications, resolve complex issues which are multilateral in nature, to serve as an integrative mechanism by creating a forum where participants take off their SBU hats, wear a corporate hat and examine issues from this perspective.

14

REFERENCES: www.bpcl.com www.wikipedia.com www.slideshare.com www.docstoc.com www.reuters.com www.economictimes.com

15